Method for facilitating financial and non financial transactions between customers, retailers and suppliers

ABSTRACT

A new medium of tender employs both a primary barcode and a merchant specific extension barcode that are both associated with specific consumers. The system operates within preexisting merchant platforms and links merchant systems, POS systems, inventory systems, SKU systems, barcode readers and a server switch. The system allows the ready linking and access of consumer transaction related information including purchase history, credit information, merchandise details and similar information. It further allows for the ready remittance of payment via the ACH network through the eCache computer network or other funding networks based on criteria established by the merchant itself. It further facilitates the administration of consumer rewards or loyalty programs and also facilitates consignment arrangements between suppliers and merchants.

CROSS-REFERENCE TO RELATED APPLICATIONS

The present application claims priority benefit under 35 U.S.C. §119(e)of U.S. Provisional Patent Application Ser. No. 60/913,964, filed Apr.25, 2007 and U.S. Provisional Patent Application Ser. No. 60/915,139,filed May 1, 2007 and U.S. Utility patent application Ser. No.11/464,694 filed Aug. 15, 2006. The disclosures of these applicationsare incorporated herein by reference.

FIELD OF THE INVENTION

The present invention relates to the facilitation of certain financialand nonfinancial transactions between customers, retailers andsuppliers.

BACKGROUND OF THE INVENTION

The volume of electronic payment transactions executed with generalpurpose cards such as credit cards, debit cards, both “online” and“offline”, and ATM cards at the point of sale (“POS”) account for 28.5%of consumer spending in 2005 up from 12.6% in 1995. Notwithstanding, by2010, such payments are expected to grow by 70% further eroding theprofitability of merchants. The system for executing electronictransactions is currently determined by card issuing banks, cardassociations, EFT networks and processors which charge substantial feesfor processing these transactions in the form of interchange. Today'scard payment networks are grossly inefficient and layered with cost.Each time a card association, EFT network or processor touches atransaction they add fees in the form of interchange. Those transactionfees are borne by the merchant, passed on to the customer and continueto rise. United States interchange fees have increased 29% since 1995.At present the transaction fee paid by the merchant for a relativelymoderate purchase of $100.00 can approach $3.00. It will be readily seenthat given the already large and increasing percentage of POS sales thatare executed using general purpose cards such as credit cards, debitcards and ATM cards, these transaction fees have a significant impact onmerchant profitability. Since a greater number of transactions aresubject to interchange fees the total cost of interchange to merchantshave tripled in the last ten years. As the trend toward increasing usageof such payment mechanisms continues to rise, the transaction fees willsimilarly increase. In 2005 American merchants paid nearly $50 Billionto accept credit cards.

This presents a dilemma for merchants because while customers generallylike the convenience of using such devices for completing purchases, thetransactions continue to grow more costly. On average credit cardtransactions cost American Merchants six times as much as cashtransactions and twice as much as checks or PIN based debit cards.

Average cost per transaction of accepting payments for U.S. retailers in2000 OFF-LINE (SIGNATURE) ON-LINE (PIN) CREDIT CARDS DEBIT CARDS CHECKSDEBIT CARDS CASH Average Cost $0.72 $0.72 $0.36 $0.34 $0.12 PerTransaction

Furthermore, while customers generally like using checks for payment,the use of checks has been in decline. Furthermore while customersgenerally like using checks for payment they are not as convenient ascards hence there use their use has been in decline. Accordingly, thereis a need to provide consumers and merchants with a real alternative tothe disadvantages of the current methods of payment while preserving theadvantage of payment by check.

Furthermore, because conventional debit cards, credit cards and ATMcards are under the control of the issuing banks, card associations, EFTnetworks and processors merchants must comply with the dictates of theseinstitutions and have no control over the processes. These merchantrestraints are designed to restrict merchants' options as to what typeof payment systems they can accept and how they can price them, andforce merchants to bundle the pricing of payment systems with theunderlying goods and services being sold. In effect, all consumersunderwrite the increased costs of general purpose cards in the form ofhigher prices for all consumers, even those who pay by cash. Anotherdisadvantage is that merchants have no ability to identify a specificcustomer by name, address, telephone number, e-mail address or otheridentifying data and link them to consumer purchase information withintransaction related databases. Such information is of tremendouspotential value to merchants as it may allow the tracking of transactionrelated data, so-called “basket metrics” and the relationship of thatdata to the specific customer. Basket-metrics can include informationwithout limitation, such as item count, sales amount, demographicsconcerning customers and store location, responsiveness to promotionssuch as coupon or special promotion codes and customer related dataconcerning the purchase frequency, volume and value on a per customerbasis over the lifetime of a shopping relationship. Without the abilityto readily track that information and associate it to individualconsumers whose names, addresses and other contact information is known,retailers lose the opportunity to directly target and market consumerson an individual basis.

Furthermore, as consumer purchases are currently effectuated, managingeffective buyer loyalty or rewards programs is rendered difficultbecause such programs require the tracking of consumer purchases both interms of number and volume. Unless merchants have an effective methodfor gathering, compiling and administering necessary transaction relateddata along with consumer specific data, reward and customer loyaltyprograms cannot effectively be managed.

In addition, merchants generally do not have access to consumer creditinformation including, of specific concern, readily accessibleinformation regarding prior approvals or declines at the point of sale(“POS”). Occasionally a merchant will receive an approval from a creditcard issuer only to later find out that the approval was based upon a“stand in” event when the customer's actual balance information wasunavailable. Thus a merchant may complete a sales transaction only tohave the transaction subsequently fail to close or be charged back. Thisoccurs when a consumer is the victim of fraud, enters a dispute withtheir credit card company, or when a consumer with a poor credit historydefaults, has insufficient funds, or otherwise precludes funding of thesales. Similarly, other customers may have an excessive rate of returns.That is, the customer may regularly purchase items but subsequentlyreturn them for a refund or other credit. Such customers may beconsidered less desirable or less profitable customers; information asto whom the merchant would like to be informed.

Finally, under current systems, managing effective consignmentrelationships is rendered difficult and time consuming as a result ofthe record keeping that must accompany such arrangements and the delaysin settling accounts between the parties involved. Thus, for example, asupplier may be hesitant to enter into a consignment agreement becauseof the delays in receiving payments from merchants.

Accordingly, there is therefore a need for a retailer owned POS paymentsystem which provides convenience to consumers, reduces and controlstransaction costs for merchants, allows for the effective management ofconsignment relationships, and allows for merchant access to consumertransaction related information which the merchant can then use for avariety of purposes.

SUMMARY OF THE INVENTION

The present invention provides a method for facilitating financial andrelated non-financial transactions between customers, retailers andsuppliers engaged in commercial remittance transactions performed overthe internet, over wired and wireless telephone networks, and over localarea networks including but not limited to WiFi systems. The system usesa proprietary network (a virtual private network) that interfaces withmerchants who are registered to use the eCache system, which is theproprietary network and system that is referenced in this applicationand patent application Ser. No. 11/464,694 which is hereby incorporatedby reference. The transaction related data that eCache stores andaccesses may be stored either within the merchant's own system or oneCache servers which are external to the merchant's system. The eCachedecision making process may similarly occur within the merchant's systemor on the eCache server or system of servers.

The system bypasses conventional card processing infrastructure byproviding and utilizing a link between the retailer's POS system and theACH network. The Automated Clearing House (ACH) is a central clearingfacility operated by a private organization or a Federal Reserve Bank(FRB) on behalf of Depositor Financial Institutions (DFIs).Participating DFIs transmit or receive ACH entries that allow fortransactions to be funded from a customer checking account or a pooledaccount established for reward and loyalty transactions as an ACHtransaction. Users are cross-referenced to bank accounts (demand depositaccounts, or ‘DDAs’) they control, and through which the user can makewithdrawals, or settle accounts on the internet. Banks are identifiedusing a bank identification number. An additional link allows generalpurpose cards such as credit cards, debit cards, charge cards andprepaid cards to be switched to and authorized through a merchantprocessor network, association network, debit network or ATM network,where they may be used to complete a sales transaction. General purposecard transactions and eCache transactions may be routed through a serverswitch resident within the merchant's POS or other systems at themerchant location.

A server switch or eCache server switch is a server that containsproprietary software that reviews transaction data to validate inputdata, link to internal or external databases, approve or declinetransactions based upon a rules database applied to input data and itsinternal or external databases. The server switch also contains routingpreference tables which allow a transaction to be routed to externaldebit or credit networks based upon the lowest cost of that transactionto a retailer. The eCache Server issues instructions to member banksthat will be carried out on existing financial networks. In so doing,the eCache Server can make predetermined choices for structuring thetransaction, taking into consideration such factors as transactionalcosts charged by other financial networks for various types oftransactions, the time for settlement of the transaction, and thefinality and immediacy to be accorded the transaction in real time. TheeCache Server will instruct member banks to initiate monetary transfers.Such transfers may involve only internal bank transfers, or, suchinstructions may involve initiating an ACH transfer of funds betweenbanks. As a general rule, regardless whether the transfer will be anintrabank transfer or will transfer money from one bank to another, thetransaction will be initiated as a preformatted ACH CCD, that is, arequest to initiate an ACH transaction. The server switch also storesdecision data to be transmitted to an external server for additionalprocessing. Such additional processing may include batching approvedtransaction data to an external server for submission to the ACH networkor a credit or debit card network. The server switch also createsend-of-day settlement files that contain financial and non-financialdata that are transmitted to external servers.

The VPN of this invention is hosted indirectly through member banks whoare also directly connected to one of the ACH networks that providebanks with means to transfer funds between banks on behalf of theircustomers. The eCache Server is a proprietary server and network that isoperated by an eCache Operator. The eCache Operator is authorized bymember banks or other financial or non-financial institutions(collectively referred to herein as “banks”) to originate ACHtransactions with member banks on behalf of the banks' account holdersthrough operating agreements with each member bank. When an operatingagreement is executed with a bank, the eCache Server establishes adiscrete, secure network connection to that bank, and creates potentialindirect access for all that bank's demand deposit account (DDA)customers to the eCache Server.

The server switch may also be hosted externally by eCache. The serverswitch has the ability to distinguish between eCache transactions andgeneral purpose card transactions. General purpose card transactions canbe routed to selected merchant processors according to merchantestablished guidelines. eCache transactions can be approved or declinedby the server switch or by the eCache server.

The eCache server switch connects the merchant retail inventory, POS andACH networks and operates over existing retailer platforms. Depending onthe degree of connectivity and the linkages between various retailersystems within a retailer's network environment, the eCache serverswitch may connect at one or multiple nodes. If, for example there arelinkages between the merchant's POS system and inventory system, eCachemay function by linking only to either the POS system or the inventorysystem. If the systems are not linked, depending on the functionalitythe retailer requires the eCache server switch may link separately tothe various systems of the retailer. It may further integrate inventorysystems, barcode readers, SKU systems, POS terminals and other existingretailer information systems. By operating within the inventory systemof the retailer or supplier, the system allows for the automaticrecordation of a complete transaction record incorporating a widevariety of sales related data. In addition, through use of the consumerspecific bar codes, data from each transaction may be related to theindividual consumer and associated with demographic data that furtheridentifies the consumer.

The invention employs a new payment medium that includes a system ofunique identification primary barcodes which are personal to a customerand may be tendered at the POS of a merchant or retailer. The primarybarcode may be an International Standards Organization barcode, a GlobalElectronic Party Information Registry barcode, a UPC barcode, or anyother type of barcode. There is no requirement that the barcode be anyparticular type as long as the primary barcode may be read or entered bya barcode reader at a merchant's POS.

Each customer-specific primary barcode is further linked to an extensionbarcode or barcodes. The extension barcodes are linked to specificretailers' POS systems and may also be linked to the retailers'inventory or SKU systems. To protect against barcode theft or fraud, theprimary barcode will be further linked to a master barcode or otherconsumer identifier which may not be given to the consumer and will bemaintained by eCache. The master barcode or other customer identifierallows eCache to associate and maintain specific consumer transactionrelated data with specific consumer accounts in a more secureenvironment. The consumer will not need access to the master barcode orother consumer identifier to complete a transaction but will be able tocomplete transactions using the primary and extension barcodes.

Each primary barcode is personal to a customer and may take manydifferent forms. The barcodes may be imprinted on clear plastic sheetswhich may be affixed to retailer reward cards, identification cards, orexisting third party credit, debit, prepaid or ATM cards. The barcodesmay also be attached to other personal items such as wallets, cell phonecases, watches, or bracelets. It should be recognized that a widevariety of items may be used upon which to affix the adhesive barcodesand the above examples are set forth as examples, not as limitations.Moreover, the barcodes may themselves be imprinted on card blanks or anyother suitable media. Any medium capable of retaining and displaying abarcode will suffice.

The primary barcodes are issued to qualified customers and allow for theready payment of commercial transactions and further allow for thegathering of a wide variety of information related to the transaction.Qualified customers will have agreed to terms and conditions for use ofthe barcode system and may have submitted a wide variety of informationin connection therewith. The information may include full name, address,telephone number, driver's license information, e-mail address or otheridentifying and demographic data. Such information may further includedemand deposit account (“DDA”) information, and account informationconcerning credit cards, debit cards, stored value or prepaid cards orpayment methods. Customers using the eCache system will conclude andfund transactions by initiating an ACH transaction or a general purposecard transaction using one of the accounts.

In addition to the primary barcode, each customer is also provided withan extension barcode or barcodes which may either be assigned to thecustomer or selected by the customer. The extension barcodes are linkedto a specific retailer and allow a customer the privilege of completinga sales transaction with that retailer who is a participant in thebarcode program. For purposes of security against barcode theft orfraud, an individual's master barcode may not be given to theindividual, but may be maintained by the eCache system and linked to oneor more primary barcodes issued to the individual for day in and day outusage The extension barcode may be a scanable barcode or may take theform of a series of numbers or characters that may be entered by key pador other mechanism

When a customer wishes to purchase items using the eCache system, thecustomer will present these items to the cashier who scans the items aswith any other typical purchase. The customer then tenders his or herprimary barcode to the cashier, other POS personnel or could, forexample, input the primary barcode himself or herself, as in the case ofa self-checkout lane. The merchant's POS system will then transmit thebarcode to the eCache server switch which will validate the barcode andprompt the customer for entry of his or her extension barcode. Theextension barcode may consist of multiple numbers, letters or somecombination thereof. The merchant's POS system may also be configured oradapted to prompt for the extension barcode without the necessity ofrouting to the eCache server switch. Each extension barcode isconstructed in such a manner that a predetermined digit, e.g., the lastdigit, will determine from which account the customer will complete thesales transaction. For example, the last alpha or numeric digit mightcontain an “A”, “C”, “D” or “1”, “2”, or “3” designating any one of anumber of different funding sources or providing for a default to ademand deposit account.

Once the primary barcode has been validated and the customer has enteredthe extension barcode, the merchant's POS personnel enter the purchaseitems as they would ordinarily. When the total sales are “rung up” andthe customer has presented the barcodes, the totals, now associated withthe extension barcode, are routed to the eCache server switch for eitheran approval or decline of the sales transaction. The approval processmay include the use of databases that contain negative and positivetransaction data related to the consumer who has presented the barcodefor validation. Such other information may be of significance to aretailer, such as an “excessive returns” database. For instance, if thecustomer had previously presented a barcode in connection with a salethat has previously been approved but which was subsequently deniedbefore being funded, the transaction would be posted to a negativedatabase, and would remain associated with that customer. Thus when thesame customer presented the barcodes for a later sales transaction, themerchant would have access to the associated negative history. Positivetransactions associated with a customer through the bar code systemwould likewise be recorded and available for the merchant's information,or to other merchants in the eCache network. Transactions could also beapproved or declined after reviewing a merchant return database. Ahistory of excessive returns may result in a declined transaction.

If the purchase is approved, then settlement of the purchase may proceedas an ordinary ACH settlement, or a credit settlement, or by any othersuitable method. Settlement of an eCache Server transaction occurs whenavailable funds are transferred in consideration of an obligation andthe transfer has been recorded in each party's account, which may be abank account (DDA).

Another function of the system allows for a subsequent confirmation byrouting the requested transactions through an external verificationservice. Such service may include, without limitation, check guaranteeservices, credit bureaus, or credit, signature debit or PIN debitauthorization services for a further approval or decline. Thus, whethereCache issues an approval or a decline, the system allows for furthervalidation of the transaction if the merchant so desires. Contingentupon the result of that process, the merchant can determine whether toproceed and complete the transaction or to decline it. As stated above,depending on the result of that process, the consumer's purchase can besettled using an ACH route, or credit route, or any other acceptablemeans to fund the transaction.

Another aspect of the invention involves the administration of buyerreward and buyer loyalty programs. Under a typical reward or loyaltyprogram, qualified consumers “earn” future discounts, gifts, or evenrefunds, based on how often they shop at a particular retailer and thevalue of the consumers' spending at that retailer. Under a usual system,the more a consumer spends, the more he or she “earns” as a reward fortheir continued patronage. The difficulty arises, however, in compilingand maintaining a sufficient database of information to allow for theadministration of the program. Cashiers or other POS personnel, forexample, would have difficulty in recording and entering the sort ofdata needed to run such a program manually. The present invention,however, allows for the automatic compilation of sales transaction databy utilizing the link between the retailer's inventory system, the POSsystem, and the merchant's barcode readers coupled with the customer'sextension barcode. Thus purchases by qualified consumers are tracked andmaintained by the system and can be used to administer and manage buyerrewards or loyalty programs.

As a concomitant to establishing a buyer reward or loyalty program, thepresent system allows a merchant a simple and practical method ofensuring that such programs are properly funded. Depending on the designof the program by the merchant, the eCache system is capable ofearmarking a predetermined percentage or fixed amount of any salestransaction for the purpose of funding a pooled reward account. Thus themerchant is in a position to ensure that there are adequate resources tofund the rewards program.

The eCache system further facilitates consignment relationships betweensuppliers and merchants. In a typical consignment transaction, themerchant agrees to carry a stock of merchandise for the buyer but hasnot yet purchased the item from the supplier. If the item is sold, themerchant remunerates the supplier for the item while retaining a portionas profit or fee. Such commercial relations are time consuming anddifficult to administer as adequate records of the sale must bemaintained to ensure both retailer and supplier are properlycompensated. There are often further delays associated with the finalsettling of accounts between the merchant and supplier. For example, themerchant may wish to ensure the customer's transaction is finallysettled before settling with the supplier. By residing within themerchant's POS and inventory system, eCache allows consignment items tobe recognized and, under appropriate circumstances based on criteria ofthe merchant, to be settled quickly with both customer and supplier.

It is thus an object of this invention to utilize existing systems andnetworks including POS systems, retailer inventory system, SKU systemsand ACH networks to link consumer transaction data to individualconsumers so that such information may be used to evaluate whether toallow a purchase to conclude.

It is further an object of this invention to provide an alternativemedium of exchange without the excessive interchange fees that accompanytypical credit and debit transactions.

It is a further object of this invention to provide a system forgathering data, so-called “basket metrics” and linking such data toparticular consumers so that the merchant may use the information tomore effectively market to and target consumers.

It is another object of the present invention to provide a system inwhich a merchant can compile a database of consumer information relatedto consumer purchasing that can be modeled to more effectively targetnew consumers or increase sales to existing consumers.

It is another object of the instant invention to provide a system forgathering consumer transaction related data for administering effectivebuyer reward and loyalty programs.

It is another object of this invention to allow for the effectivetracking of consumer purchasing information so that merchants mayassemble profiles of consumers for determining which customers are highvalue customers and which are not.

It is a further object of the instant invention to allow a systemwhereby a merchant may designate portions of each customer transactionfor funding a pooled reward account through which buyer reward andloyalty programs may be funded.

It is a further object of this invention to provide a system that canfacilitate traditional consignment relationships, including the timelyremuneration of the parties thereto.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS

FIG. 1 depicts one embodiment of the invention. Here the eCache serverswitch, 10, is linked to the retailer's inventory system, 11, and to theretailer's POS system, 12 and to the retailers' SKU system, 13.Depending on the connectivity of the retailer's systems and network, theeCache server switch, 10, may be directly linked to only one node, or ashere, by way of example, to multiple nodes. The eCache server switch maybe linked to an external eCache server or servers. A further link, 18,between the eCache server switch and the ACH network, 19A, allows fortransactions to proceed as ACH transactions. Because eCache does notdisplace and preclude the use of other payment systems, there willtypically be a further link, 19, that allows payments to proceed viatraditional methods such as credit cards, debit cards or similardevices. A transaction according to the present invention may include aconsumer, 14, who after presenting items to the cashier for scanning ortotaling, presents his or her primary barcode, 16, at the retailers POSreader or input keyboard, 15. The primary barcode, 16, has been assignedto the consumer. An extension barcode, 17, is also assigned or may beselected by the consumer. The individual customer's primary barcode, 16,and each extension barcode, 17, is linked to a consumer in the eCachesystem.

FIG. 2 depicts the linkage. In FIG. 2, the barcode, 20, may be affixedto any medium such as an identification card, a credit card or even apersonal item such as an article of jewelry. It may further be markedwith an eCache logo, 21, or other signifier showing that the barcode islinked to the eCache network. The customer's primary barcode is crossreferenced to various retailer-specific extension barcode barcodes, 22,that have been selected by or assigned to the consumer. FIG. 2, alsodepicts a primary barcode and multiple retailers to which it can belinked via the extension barcodes, 22. The extension barcode, 22, may beconfigured so that a predetermined digit, e.g., the last digit, 23, ofthe barcode will identify from which source a consumer will fund thetransaction. The extension barcode may, for example, be a four characterbarcode wherein the last character designates which from which accountpayment will be made. In one example the extension barcode willterminate in “D” might also be a number signifying that the consumerwishes to fund the transaction from a Demand Deposit Account. Theprimary barcode, 20, is linked not only to the user's extensionbarcodes, 22, but also to a master barcode or other customer identifier,24, that may not be known to the user. This secure master barcodeprotects against fraud and theft and allows for eCache to readilymaintain an associated consumer database.

FIG. 1A shows another embodiment of the system. Here the merchant'scomputer network environment exhibits a high degree of connectivity. Inthis embodiment, the merchant's retailer inventory system, SKU systemand POS system are all interconnected. The eCache system may thereforefor operate by connecting the eCache server switch to any one node onthe system, here, for example, to the POS system which is itself furtherlinked to the merchant' SKU system and inventory system. In thisembodiment, the ACH network as well as traditional payment mechanismsare accessed through the eCache server switch.

In yet another embodiment of the instant invention, all traditionalfunding mechanism transactions are routed to an external eCache serverswitch. eCache would then aggregate such transactions from multipleretailers to submit to a traditional funding processor to garner lowervolume pricing for these transactions than what retailers might havebeen able to negotiate on their own.

FIG. 3 shows the system in use. The consumer presents his primarybarcode, 30, to the cashier or merchant personnel. The cashier scans theprimary barcode, 30, through a reader or otherwise enters, 31, theprimary barcode, 30, into the POS system. The primary barcodeinformation is transmitted over the network via a communications link tothe eCache server switch for validation and confirmation that the useris authorized to use eCache, 32. If the barcode is not recognized, or ifthe account is otherwise barred, the system issues a rejection, 33. Ifthe primary barcode, 30, has been validated, eCache sends a furtherprompt, 34, requiring the consumer to input the extension barcode, 36.eCache may decline to approve the extension barcode depending on variouscriteria and issue a rejection, 35. If eCache further approves theextension barcode, 36, the consumer is allowed to continue the purchasevia eCache. eCache will then send the requested transaction for anapproval or decline of payment. Additionally, the merchant's POS systemmay itself prompt for the extension barcode. Alternatively, the primarybarcode may be transmitted via the eCache server switch to an externaleCache server or bank of servers from which the extension barcode promptis then generated.

In practice, a consumer may be issued as many extension barcodes as orhe or she wishes one for each of the various participating merchants. Ifthe consumer makes purchases at more than one retailer, he or she willhave an extension barcode for each location. Thus the customer's primarybarcode, 20, may be linked to numerous extension barcodes, 22, each onebeing specific to a given retailer. FIG. 2 depicts this linking ofprimary barcode, 20, to extension barcodes, 22. Because the customerenters the extension barcode at the POS, the customer may select fromwhich account he or she will fund the transaction by varying the lastdigit, 23. The customer can therefore direct that the transaction becompleted from his or her checking account, debit card account, demanddeposit account, or other suitable source.

In a typical transaction, FIG. 4, once the cashier or other salesperson, 40, processes a consumer's purchases, 41, the consumer willtender his or her barcode, 42, to the cashier for input into the barcodereader at the POS, 43 and for validation as described herein. In oneaspect of the present invention, the POS system has recorded various“basket metrics”, 44, associated with the consumer's attemptedpurchases, 41. As outlined above, eCache may issue a rejection, 45,terminating the transaction as an eCache transaction. Assumingvalidation occurs, however, upon validation of the primary barcode, 42,validation of the extension barcode, 43, and approval, 48, theconsumer's purchases, 41, are associated with the consumer and stored ina database, 49. Thus, as the consumer's purchases, 41, are entered intothe retailer's POS system, the eCache system via a communications linkto the eCache server switch, 47, records such data as item quantity,price, total amount, store location, use of coupons or other promotioncodes, and other data that may reflect pertinent transaction-relateddata concerning the exchange. Some retailers, as an alternative, mightcompile the purchase metrics and transfer the information to eCache at alater time. The transaction data is associated with the customer'sprimary barcode or extension barcode in a transaction database, 49, sothat the merchant will have access to the information. The merchant willtherefore be able to assemble a profile and history of the consumer astransactions are completed and stored by the system. The resultanttransaction data may then be used by the merchant in formattingmarketing strategies or for other similar purposes. Given the growth ofdata mining techniques, the transaction data may also be exchanged withvarious companies that use such data. Thus, the system of this inventionallows the merchant to realize a strategic asset from the costs ofexecuting a transaction where as, without the invention, transactioncosts will typically go unrecovered by the merchant.

The present invention incorporates additional functionality as well, andallows the merchant to track and access credit information of theconsumers who use the system. This is depicted in FIG. 5. Thus in oneaspect of the present invention, a consumer, 50, presents his or herprimary barcode, 51, for validation at a retailer's POS, 52. Upon beingprompted, the consumer enters his or her extension barcode, 53. Uponvalidation of the extension barcode, the eCache system, through theeCache server switch, 54, accesses stored data, 55, related to thehistory of the consumer's transactions. eCache can then issue anapproval or decline based on criteria formulated by the merchant orother entity and stored on the eCache server switch or external eCacheservers. The approval or decline is then transmitted to the merchant atthe POS, 52. The criteria may be entered into the system by eCachepersonnel. Additionally, in other embodiments, the merchant itself mayenter the approval or decline criteria.

The decision to accept or decline the transaction may be made basedsolely upon the information stored in the database from a specificretailer, or it might be a compilation of transactions with all eCachemerchants. Further, the database may be updated periodically on, forexample, an hourly basis. In FIG. 5, the consumer, 50, has presented theprimary and extension barcodes for validation at the retailer's POS, 52.ECache now accesses stored data based on prior transactions or attemptedtransactions, 55. In this example the consumer has previously completeda purchase, for example, from a credit card account, which subsequentlywas declined. Ordinarily, a merchant would not have access to thisinformation but the eCache system accesses the stored credit transactiondata, here negative data, which has been stored in a database, 55 andthat has been associated with the consumer, 50. Based on eCache'sevaluation of the negative data, 56, a decision may be made and eCachecan approve or decline the transaction, 57.

Alternatively, through another communications link, 58, eCache mayconnect to an external verification service, 56, such as check guaranteeservices, or credit bureau or credit, signature debit or PIN debitauthorization services, for a further approval or decline. Depending onthe results of that verification, 59, eCache can formulate a decision toallow or decline the transaction.

Similarly, eCache allows for previously stored positive transaction datato be used by the merchant in formulating an approval or decline or forother purposes including targeting specific marketing material toprofitable customers. Such information, like negative information, maybe shared with other eCache merchants. In that case, the information isdrawn from stored databases of positive and negative transaction-relateddata, including, excessive return information, and can be used by alleCache merchants to determine whether and on what terms a transactioncan be approved. It should be appreciated that these decision-relatedfunctions may take place within the merchant's own system.Alternatively, the relevant data may be transmitted to an eCache serveror server bank where the data may also be stored and where approvals ordeclines may also be formulated.

eCache also allows decisions whether to close a transaction to be basedon other criteria. As an example, a customer may have had an excessivehistory of returns, i.e., the return of merchandise previously purchasedfor a refund. eCache allows the merchant to track returns by customer.This information is entered into a database as stored data detailingexcessive returns. When the eCache barcode is presented at the POS,eCache can access the stored data to determine whether the customer hashad a history of excessive returns and, depending on merchantestablished criteria, can issue an approval or decline.

Another aspect of the present invention allows the merchant to trackpurchases and sales for purposes of administering buyer loyalty andrewards programs. Thus in one embodiment of the current invention,eCache will track an individual consumer's purchases by amount, type andquantity for the purposes of determining eligibility for participationin such programs as might be established by the merchant. FIG. 6 depictsa rewards program in operation. Where a retailer has established such aprogram, the retailer will establish a schedule or rules, 61, concerningeligibility for rewards and the administration of such a program.Rewards may include, for example, discounts, merchandise or even cashback to frequent or high volume purchasers. Typically, a customer'seligibility to participate will depend on the value of purchases orfrequency of purchases that he or she has made. Thus upon presentationby a consumer of the primary barcode and extension barcode at themerchant's POS, eCache, upon receipt of the extension barcode willcompile and record the transaction data which is applied to the scheduleor rules, 61. The results of that process are associated with theconsumer through the extension barcode and primary barcode for purposesof administering the reward program and stored in the rewards database.Subsequently, eCache can access such stored data as to volume or valueof previous purchases by a customer from the retailer to determinewhether and to what extent a consumer qualifies for any perquisites as aparticipant in a rewards program.

The eCache system further allows a merchant to ensure that any programshe or she may establish are adequately funded from the consumer'spurchases. The system thus allows the merchant to designate that aportion of any sales transaction be used for purposes of funding apooled reward account that is in turn used to fund the reward or loyaltyprogram.

Another embodiment of the present invention illustrates its use inmanaging effective consignment relationships. FIG. 7 a depicts a typicalconsignment transaction using the eCache system. Here, the supplier, 70,has consigned merchandise, 71, for sale at the retailer location. Theconsigned merchandise, 71, has been designated as such in the merchant'sinventory system, 72.

In FIG. 7 b, a consumer, 73, who wishes to purchase the consignedmerchandise, 74, will present the items for entry at the POS, 75. Thecashier will scan the consignment items and the consumer will tender theeCache barcode and extension barcodes for payment. The POS communicateswith the retail inventory system, 72, and determines that themerchandise has been consigned by a supplier. The retailer POS systemthen transmits this information to the eCache server switch, 75. Themerchandise is recognized as consigned merchandise and, according topredetermined criteria, 76, previously entered by the merchant, eCacheassigns a percentage or portion of the price to be remitted via an ACHtransaction, 77, to the supplier, 78 in settlement of the relationship.eCache allows great flexibility to a merchant to determine the terms anddetails of any consignment relationship including the time of remittanceof payment to the supplier, depending on the specific profile of a givencustomer.

1. On a computer network comprising at least a merchant's computernetwork including a point of sale (POS) device connected to saidmerchant's computer network, a first virtual private network (VPN)connecting said merchant's computer network to a proprietary server, asecond VPN connecting said server to an originating depository financialinstitution (ODFI), an automated clearing house (ACH) network connectedto said ODFI, and one or more accounts controlled by a customer forfunding a transaction, at least one of said one or more accounts being ademand deposit account (DDA) maintained by a bank, said DDA beingaccessible through said ACH network for funding financial transactions,a method for initiating and completing a financial transactioncomprising the steps of: storing on said server information thatidentifies said customer and said one or more accounts controlled bysaid customer including said DDA, said information comprising at leastan account number that identifies said DDA and an identification numberidentifying said bank where said DDA is maintained; creating a customerspecific primary barcode and at least one extension barcode linked tosaid primary barcode; associating said primary barcode with saidinformation that identifies said customer; associating said extensionbarcode with said merchant; transmitting said primary barcode to saidserver via said first VPN for validation that said customer isauthorized to conduct transactions on said server; receiving saidvalidation; transmitting said extension barcode to said server; enteringdata representing said items for purchase into said POS device,associating said data with said customer, and sending said data to saidserver for approval of a purchase transaction of said items; receivingapproval to transact a purchase of said items; routing said transactionto one of said one or more accounts controlled by said customer; and ifsaid account is said DDA, routing said transaction through said secondVPN to said ODFI as an ACH transaction for processing and settlingthrough said ACH network; and if said account is not a DDA, routing saidtransaction through a network whereby said financial transaction isfunded from said account.
 2. The method of claim 1 further comprisingthe steps of: associating said primary barcode and said extensionbarcode with a master barcode; and maintaining said master barcode asconfidential and limiting access to said master barcode.
 3. The methodof claim 1 wherein the step of routing said transaction to said ODFI asan ACH transaction further comprises directing that the transactionamount be withdrawn from said DDA controlled by said customer anddeposited into a predetermined account of said merchant associated withsaid extension barcode.
 4. The method claimed in claim 1, furthercomprising the steps of: generating said extension barcode on saidmerchant's computer network.
 5. The method claimed in claim 1, furthercomprising the steps of: if said account is not a DDA, routing saidtransaction to a general purpose credit or debit card transactionnetwork for completing said transaction.
 6. The method claimed in claim1, further comprising the steps of: maintaining routing preferencetables on said server, said routing preference tables providing routinginformation for a plurality of external networks and the costs to saidmerchant of routing a transaction via each said network; and routingsaid transaction to the external network having the lowest transactioncost to said merchant for settling said transaction.
 7. The methodclaimed in claim 1 further comprising the steps of: associating each ofsaid one or more accounts with a unique alphanumeric digit; reserving apredetermined position in said extension barcode to be occupied by oneof said unique alphanumeric digits; said customer selecting an accountfrom said one or more accounts from which said transaction will befunded; placing the unique alphanumeric digit associated with saidselected account in said predetermined position in said extensionbarcode; funding said transaction from said account indicated by saidunique alphanumeric digit occupying said predetermined position in saidextension barcode.
 8. The method claimed in claim 1 further comprisingthe steps of: associating each of said one or more accounts with aunique alphanumeric digit; reserving a predetermined position in saidextension barcode to be occupied by one of said unique alphanumericdigits; said merchant selecting an account from said one or moreaccounts from which said transaction will be funded; placing the uniquealphanumeric digit associated with said selected account in saidpredetermined position in said extension barcode; funding saidtransaction from said account indicated by said unique alphanumericdigit occupying said predetermined position in said extension barcode.